In-House Counsel as Relators in False Claims Act Qui Tam Lawsuits

Image result for attorney stock images freeI recently published a post for my article on in-house counsel whistleblowers here, and this is a deeper dive into the False Claims Act issues that attorney-whistleblowers may face.

Generally, an in-house attorney may be a relator in a Qui Tam action against their employer only if the ethical rules applicable to that attorney would permit the disclosure of the client’s (employer’s) confidential information in such circumstances. See U.S. ex rel. Doe v. X Corp., 862 F. Supp. 1502, 1508 (E.D. Va. 1994) (“the general rule” is “that the qui tam statute does not exclude lawyers or members of any particular profession from being relators, nor does it preclude or preempt state law from making certain individuals subject to certain obligations which may, in certain circumstances, have the incidental effect of preventing those individuals from being relators.”); United States v. Quest Diagnostics Inc., 734 F.3d 154 (2d Cir. 2013) (in-house counsel could not be Relator in Qui Tam action in which he had revealed client/employer’s confidential information, since the New York rules of professional conduct prohibit such actions). Further, in-house attorneys have been permitted to be relators in Qui Tam cases based on state false claims acts. See, e.g., Bury v. Cmty. Hosps. of Cent. California, No. F036667, 2002 WL 968833 (Cal. Ct. App. May 8, 2002) (attorney’s status as hospital’s former general counsel did not preclude him from bringing qui tam action against hospital and county, based on allegations that hospital diverted MediCal funds to county in violation of False Claims Act).

That said, in-house counsel are likely protected from retaliation for engaging in efforts to stop one or more violations of the FCA, but this is less than certain. For decades prior to 2009, the FCA’s anti-retaliation provision only protected whistleblowers who made efforts in furtherance of a Qui Tam action. Then, as part of the Fraud Enforcement and Recovery Act (FERA) in 2009, Congress broadened the protections of the FCA’s anti-retaliation provision by adding “efforts to stop 1 or more violations” of the FCA to the Act’s scope of protected activity. Under this broader protected activity standard, a whistleblower is protected from retaliation even if they could not otherwise bring a Qui Tam claim, so long as they engaged in efforts to stop a violation of the FCA. Consequently, even if an in-house attorney were barred from becoming a Relator in a Qui Tam action, her efforts to stop the violations of the FCA that would lead to such liability are likely protected activity under the Act.